This initiative is clearly taking dead aim at EBay's "Buy it Now"
business, which as of last quarter was 34% of their volume. Only
Google is not charging listing fees (at least as far as I can tell)
they are just going to charge transaction fees. In my opinion this is
potentially very bad news for EBay. Most of the incremental sellers
that EBay has added in the last few years are merchants that are just
using EBay as a distribution channel. To them, the auctions are more
an annoyance than anything else as they would much prefer just to sell
their wares at a fixed price. Google Base will now allow merchants to
feed all their listings to Google for free and just take a cut of
transaction. What's even better is that this basically obviates much
of the need for merchants to buy click-through adds on Google as why
would you buy an add if your stuff is already indexed and ready to buy
via GoogleBase. What's more, why wouldn't you sign up for this service
if you were a merchant as there's basically no down side. I don't want
to be too dramatic, but EBay could be looking at a collapse of its
listings fees by the end of 2006 similar to what they saw in China with
Ali Baba if this gets any traction and I don't see why it won't at this
point.

You do not just wake up and decide to intermediate credit card
transactions between buyers and sellers. This takes a considerable
amount of planning and infrastructure development, particularly on the
payments side. It stands to reason now that Google has essentially
completed the infrastructure it needs to launch a Pay-Pal equivalent
which one has to believe is now rather far along in its development and
will be launched sometime in 2006. In fact, another post on Google's official blog today basically hints at this pretty heavily.

Personally, I am surprised that they moved this quickly to fill out
the payments functionality before putting a better front end on Google
Base, but I guess they figure if they build it, people will come. It
will be interesting to see how the market reacts to this monday.

UPDATE: Murali left a comment below and pointed out that EBay has already announced that they will be offering "Ebay Express"
sometime this spring. EBay Express supposedly offers a similar
universal wallet capability however as Scott (who seems to know EBay
well) pointed out in a comment on my other post on this topic that Ebay will not be the merchant of
record but will just create a multi-seller shopping cart with a
separate Pay-Pal account for each seller. In addition to what Scott
mentioned, everything posted in EBay Express will also apparently be an
EBay listing and presumably subject to all the existing EBay fees.
Also, EBay Express is not integrated into a larger search engine and
it's not clear that they will let other engines index their site (which
seems unlikely). So the net is that EBay Express is pretty different
from what Google is doing from a payments perspective and the strategic impact of Google's move into the space remains the same.

Comments

Uh oh EBay: Google Base is now facilitating payments

Feb 24, 2006 2:27:49 PM

Bill

Internet|

Legal Disclaimer

The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.